ABN AMRO BANK N.V., HONG KONG BRANCH 38/F, Cheung Kong Centre Hong Kong
Exhibit
10.3
ABN
AMRO BANK N.V., HONG KONG BRANCH
38/F,
▇▇▇▇▇▇ Kong Centre
2
Queen’s Road Central
Hong
Kong
April
19,
2007
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▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
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Ladies
and Gentlemen:
This
USD
Facility Side Letter Agreement (this “Agreement”)
is
delivered to you in connection with the Loan Agreement to be entered into among
Synutra International, Inc., as the Borrower (the “Borrower”),
▇▇▇▇▇
▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇, each as a Guarantor, and ABN AMRO Bank N.V., Hong Kong
Branch, as the Lender and the Collateral Agent, on the date hereof (the
“Loan
Agreement”).
WHEREAS,
in
order to induce the Lender to enter into the Loan Agreement, the Borrower has
agreed to enter into this Agreement with ABN AMRO Bank N.V., Hong Kong Branch
(“ABN
AMRO”).
NOW,
THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the
parties hereto agree as follows:
* *
*
Terms
defined in the Loan Agreement and not otherwise defined herein have, as used
herein, the respective meanings provided for therein.
1. FEES.
In
connection with the Loan Agreement, the Borrower agrees with ABN AMRO as
follows:
(a) The
Borrower will pay to ABN AMRO for its own account, a fee (the “Facility
Advisory and Structuring Fee”)
of
1.00% of the aggregate amount of the Commitment, as in effect on the Closing
Date. The Facility Advisory and Structuring Fee shall be for structuring the
Loan Agreement. The Facility Advisory and Structuring Fee shall be earned upon
the execution of the Loan Agreement. The Facility Advisory and Structuring
Fee
shall be payable on the earlier of (x) the date on which the first Loan under
the Loan Agreement is made and (y) the fifth Business Day after the Closing
Date.
(b) If
(i)
any Loan is repaid, repurchased, redeemed or otherwise acquired or retired
for
value, in whole or in part, other than with the proceeds of an issuance of
privately placed high-yield notes by the Borrower or a loan to the Borrower
(a
“Refinancing”)
arranged by ABN AMRO as contemplated by the Letter Agreement entered into
between ABN AMRO and the Borrower dated March 29, 2007 (the “Commitment
Letter”)
and
set forth in more detail in the Refinancing Engagement Letter (as defined below)
or (ii) no Refinancing in an amount sufficient to repay all outstanding amounts
under any Loan is completed or arranged by ABN AMRO for any reason on or prior
to the Maturity Date, the Borrower will pay, to ABN AMRO, for its own account,
a
fee (the “Refinancing
and Cancellation Fee”)
of
US$1.50 million. The Refinancing and Cancellation Fee shall be due and payable
on the earlier of (i) the date of any such repayment, repurchase, redemption,
acquisition or retirement for value or (ii) the 6-months anniversary hereof;
provided
that any
underwriting, arranger or placement agent fee that the Borrower has paid to
ABN
AMRO (other than the Facility Advisory and Structuring Fee and any fees paid
pursuant to the Loan Agreement), after the date hereof and prior to the date
on
which the Refinancing and Cancellation Fee becomes due and payable, in
connection with the offering of any other securities or debt instruments by
the
Borrower or the extension of a loan to the Borrower arranged by ABN AMRO shall
be deducted from the Refinancing and Cancellation Fee.
2. SECURITIES
DEMAND.
The
Borrower agrees that, upon the request of ABN AMRO at any time, the Borrower
will (or, if so specified by ABN AMRO, another Affiliate of the Borrower will)
issue notes or other debt securities of the Borrower or any of its Affiliates
(the “Permanent
Securities”)
in
such amount as will generate gross proceeds of an amount sufficient to pay
all
Obligations and all related fees and expenses then existing under the Loan
Agreement. The Permanent Securities, as the case may be, shall have such form,
term, yield, guarantees, covenants, default and provisions and other terms
as
are customary for securities of the type issued and may be issued in one or
more
tranches, all as determined by ABN AMRO in its reasonable
discretion.
The
Borrower will, and will cause its Affiliates to, take all commercially
reasonable actions as requested by ABN AMRO, that in the professional judgment
of ABN AMRO are necessary in connection with the offer and sale of the Permanent
Securities (including any issuance solely to ABN AMRO), including:
(a) the
Borrower shall complete and make available to ABN AMRO and potential investors
copies of an information memorandum for the offer and sale of the Permanent
Securities in a form that is in the professional judgment of ABN AMRO necessary
in connection with the offer and sale of the Permanent Securities;
and
(b) senior
management of the Borrower shall make themselves available for due diligence
and
a road show and other meetings with potential investors for the Permanent
Securities as required by ABN AMRO in its professional judgment to market the
Permanent Securities.
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ABN
AMRO
may at any time require the Borrower (or, if so specified by ABN AMRO,
Affiliates of the Borrower) to execute an underwriting or purchase agreement
providing for the issuance and sale of the Permanent Securities contemplated
hereby substantially in the form of ABN AMRO’s standard underwriting or purchase
agreement, modified as appropriate to reflect the terms of the transactions
contemplated thereby and containing such terms, covenants, conditions,
representations, warranties and indemnities as are customary in similar
transactions and providing for the delivery of an indenture, if applicable,
substantially in the form of ABN AMRO’s standard indentures, legal opinions,
comfort letters and officers’ certificates, all in form and substance reasonably
satisfactory to ABN AMRO and its counsel, as well as such other terms and
conditions as are customary and appropriate in light of then-prevailing market
conditions applicable to similar financings or in light of any aspect of the
transactions contemplated hereby that requires such other terms or conditions.
Without
limiting the generality of the foregoing, the Borrower shall procure that the
information memorandum for the Permanent Securities will not as of its date,
and
at the time of sale of the Permanent Securities, contain any untrue statement
of
a material fact or omit to state a material fact necessary in order to make
the
statements therein, in the light of the circumstances in which they are made,
not misleading.
Without
limiting the generality of the foregoing, ABN AMRO may also require the issuance
of Permanent Securities by the Borrower to the Lender in order to refinance
the
Loans and such Permanent Securities may be initially held by ABN AMRO for its
own account or resold at any time thereafter in accordance with, and with the
support of the Borrower set forth in, the other provisions of this Section
2.
3. TAKE-OUT
DEMAND AND TAKE-OUT FINANCING.
(a) Upon
notice by the Lender (a “Take-out
Demand”),
at
any time and from time to time after the date which is 60 days after the first
Credit Extension and so long as any Loan (or any part thereof) is outstanding,
the Borrower shall, within five days of receipt of the Take-out Demand, submit
to the Lender a signed acknowledgement agreeing to the Take-out Demand. The
Borrower shall, within 90 days of receipt of the Take-out Demand and without
prejudice to its repayment obligation under the Loan Documents, cause the
issuance, sale or incurrence of a Take-out Financing in one or more transactions
in such amounts as shall be necessary to repay or refinance all amounts
outstanding under any Loans.
(b) The
Borrower shall (and shall procure that any relevant Affiliate of the Borrower
will) mandate the Lender as the sole arranger, sole bookrunner and sole manager
of any form of Take-out Financing; provided
that,
subsequent to receipt of the Refinancing and Cancellation Fee by ABN AMRO (a
“Refinancing
and Cancellation Event”),
this
Section 3(a)
will
cease to be in effect and provided
further
that the
Borrower may, at its option, at any time, pre-pay the Refinancing and
Cancellation Fee.
(c) For
purposes of this Section 3:
“Take-out
Financing”
means
any Fund-raising Exercise for the purpose of, inter
alia,
repaying or refinancing the Loans.
“Fund-raising
Exercise”
means
all and any form of fund-raising exercise to be carried out by the Borrower
or
any of its Affiliates, whether in the equity or debt markets, whether in the
form of a loan or in the form of debt or equity, with or without security,
including, without limitation, the incurrence of any indebtedness, the public
or
private offering of shares/equity interests of the Borrower or any of its
Affiliates on a stock exchange or market trading or quotation system (including
the NASDAQ OTC Bulletin Board or NASDAQ Global Market), issuing new shares,
stocks, debentures, bonds or other securities and investments through market
placement or otherwise.
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4. WARRANTS.
(a) In
connection with the execution of the Loan Agreement, the Borrower agrees to
issue to ABN AMRO warrants (the “Warrants”)
which
will represent 0.80% of the existing issued share capital of the Borrower
(subject to customary anti-dilution provisions) as of the Closing Date. The
Borrower agrees to enter into a warrant agreement (the “Warrant
Agreement”)
dated
the date hereof among the Borrower, ABN AMRO, as the Warrant Grantee, and the
Bank of New York, as the Warrant Agent, which will set forth the specific
details of the Warrants and their issuance terms.
(b) As
set
forth in the Warrant Agreement, the Warrants will be exercisable at the lower
of:
(i) a
25%
discount to the average per share closing price of the Borrower’s common stock
quoted on the NASDAQ OTC Bulletin Board or the NASDAQ Global Market, as
applicable, for a consecutive period of 30 trading days up to and including
the
date hereof; or
(ii) a
25%
discount to the per share issuance price of shares of common stock issued by
the
Borrower in a Qualified Public Offering (as defined in the Warrant Agreement)
subsequent to the date hereof, excluding any issuance to employees or
consultants under any then existing Borrower plan.
(c) As
set
forth in the Warrant Agreement, (x) 50% of the Warrants shall be issued
unconditionally on the date hereof and (y) the remaining 50% of the Warrants
shall be issued on the earlier of (i) the date of the closing of a privately
placed notes offering by or of a loan to the Borrower in an amount sufficient
to
repay all amounts outstanding under any Loan and (ii) the 6-months anniversary
hereof.
5. REGISTRATION
RIGHTS.
The
Borrower further agrees to enter into a registration rights agreement, the
form
of which has been agreed upon (the “Registration
Rights Agreement”),
on
the date hereof between the Borrower and ABN AMRO. As set forth in the
Registration Rights Agreement, the Borrower shall undertake the obligations
relating to the Warrants and shares of common stock of the Borrower to be issued
upon exercise of Warrants (the “Warrant
Shares”)
as set
forth therein.
6. REFINANCING.
(a) The
Borrower further agrees to enter into an engagement letter (the “Refinancing
Engagement Letter”)
on the
date hereof between the Borrower and ABN AMRO relating to the proposed
Refinancing. As set forth in the Refinancing Engagement Letter, the Borrower
shall engage ABN AMRO as sole lead arranger and sole bookrunning manager or
arranger for any Refinancing to be completed within 6 months of the date hereof;
provided
that,
subsequent to a Refinancing and Cancellation Event, the Refinancing Engagement
Letter will cease to be in effect.
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(b) In
the
Refinancing Engagement Letter the Borrower will agree to pay ABN AMRO, for
its
own account, a fee (the “Refinancing
Arranger Fee”)
of
2.75% of the gross proceeds from such Refinancing comprising of a 2.00%
arrangement fee and a 0.75% participation fee. The Refinancing Arranger Fee
shall be paid to ABN AMRO for structuring and underwriting, placing or arranging
the Refinancing and shall be payable in full on the date of closing of the
Refinancing. In accordance with the Refinancing Engagement Letter, all out-of
pocket expenses and disbursements (including legal fees and rating agencies
costs) incurred in connection with the Refinancing (whether or not completed)
by
ABN AMRO in connection with its role as arranger or bookrunning manager of
the
Refinancing will be for the account of the Borrower. ABN AMRO shall have the
right to withhold the Refinancing Arranger Fee and its out-of pocket expenses
and disbursements at closing from the gross proceeds of the Refinancing or,
if
the Refinancing is not completed, the Borrower shall, subject to the terms
of
the Refinancing Engagement Letter, promptly reimburse ABN AMRO for its
out-of-pocket expenses and disbursements promptly upon request.
(c) In
the
event that a Refinancing is not practicable given then-prevailing market
conditions, and the Borrower determines to refinance the Loans through an
issuance or offering of equity, hybrid capital or other debt securities, whether
in a private or public offering, ABN AMRO shall have the first and last right
of
refusal to act as the Borrower’s financial advisor, underwriter or placement
agent for any such issuance or offering; provided
that,
subsequent to a Refinancing and Cancellation Event, this
Section 6(b)
will
cease to be in effect.
7. TAX
GROSS UP.
(a) Any
and
all payments by the Borrower to or for the account of ABN AMRO under this
Agreement, any Loan Document or other agreements contemplated hereby, shall
be
made free and clear of and without deduction for any and all present or future
taxes, duties, levies, imposts, deductions, assessments, fees, withholdings
or
similar charges, and all liabilities with respect thereto, subject to, in the
case of any payment under a Loan Document or any other agreement contemplated
hereby, the provisions of such Loan Document or other agreement, excluding
taxes
imposed on or measured by its overall net income and franchise taxes imposed
on
it (in lieu of net income taxes), by the jurisdiction (or any political
subdivision thereof) under the Laws of which ABN AMRO is organized (all such
non-excluded taxes, duties, levies, imposts, deductions, assessments, fees,
withholdings or similar charges, and liabilities being hereinafter referred
to
as “Taxes”).
If
the Borrower shall be required by any Laws to deduct any Taxes from or in
respect of any such sum payable to ABN AMRO, (i) the sum payable shall be
increased as necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section 7),
ABN
AMRO receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make such deductions, (iii) the
Borrower shall pay the full amount deducted to the relevant taxation authority
or other authority in accordance with applicable Laws, and (iv) within 30 days
after the date of such payment, the Borrower shall furnish to ABN AMRO the
original or a certified copy of a receipt evidencing payment
thereof.
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(b) In
addition, the Borrower agrees to pay any and all present or future stamp, court
or documentary taxes and any other excise or property taxes or charges or
similar levies (including notary and attestation fees) which arise from any
payment made under this Agreement or from the execution, delivery, performance,
enforcement or registration of, or otherwise with respect to, this Agreement
(hereinafter referred to as “Other
Taxes”).
(c) The
Borrower agrees to indemnify ABN AMRO for (i) the full amount of Taxes and
Other
Taxes (including any Taxes or Other Taxes imposed or asserted by any Government
Authority on amounts payable under this Section 7)
paid by
ABN AMRO, and (ii) any liability (including additions to tax, penalties,
interest and expenses) arising therefrom or with respect thereto, in each case
whether or not such Taxes or Other Taxes were correctly or legally imposed
or
asserted by the relevant Governmental Authority. Payment under this subsection
(c) shall be made within 10 days after the date ABN AMRO makes a demand
therefor.
8. GOVERNING
LAW.
(a) THIS
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF
THE
STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY
WITHIN SUCH STATE; PROVIDED
THAT ABN
AMRO SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
(b) ANY
LEGAL
ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY BE BROUGHT IN ▇▇▇ ▇▇▇▇▇▇
▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇ SITTING IN THE BOROUGH OF MANHATTAN, NEW YORK CITY
OR
OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF SUCH STATE, AND BY EXECUTION
AND DELIVERY OF THIS AGREEMENT, THE BORROWER AND ABN AMRO CONSENTS, FOR ITSELF
AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE
COURTS. EACH OF THE BORROWER AND ABN AMRO IRREVOCABLY WAIVES ANY OBJECTION,
INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF
FORUM
NON CONVENIENS,
WHICH
IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN
SUCH
JURISDICTION IN RESPECT OF THIS AGREEMENT OR OTHER DOCUMENT RELATED THERETO.
EACH OF THE BORROWER AND ABN AMRO WAIVES PERSONAL SERVICE OF ANY SUMMONS,
COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED
BY
THE LAW OF SUCH STATE. THE BORROWER AGREES THAT A FINAL JUDGMENT IN ANY SUCH
SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT SHALL BE CONCLUSIVE AND
BINDING UPON IT AND WILL BE GIVEN EFFECT IN ANY OTHER JURISDICTION TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW AND MAY BE ENFORCED IN ANY COURT
TO
THE JURISDICTION OF WHICH THE BORROWER IS OR MAY BE SUBJECT BY A SUIT UPON
SUCH
JUDGMENT; PROVIDED
THAT
SERVICE OF PROCESS IS EFFECTED UPON IT IN ONE OF THE MANNERS SPECIFIED HEREIN
OR
AS OTHERWISE PERMITTED BY LAW.
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9. WAIVER
OF RIGHT TO TRIAL BY JURY.
EACH
PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY
OF
ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER THIS AGREEMENT OR
IN
ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES
HERETO OR ANY OF THEM WITH RESPECT TO THIS AGREEMENT, OR THE TRANSACTIONS
RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND
WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES
AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE
DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT
MAY
FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT
TO TRIAL BY JURY.
10. PROCESS
AGENT.
Without
prejudice to any other mode of service allowed under any relevant Law, the
Borrower:
(a) irrevocably
appoints CT Corporation System, located at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇
▇▇▇▇▇, as its agent for service of process in relation to any proceedings before
the courts of the State of New York sitting in the Borough of Manhattan, New
York City or of the United States for the Southern District of such State in
connection with this Agreement; and
(b) agrees
that failure by its agent for service to notify the Borrower of the process
will
not invalidate the proceedings concerned.
11. MISCELLANEOUS.
(a) The
fees,
costs and expenses described in this Agreement shall be fully earned upon
becoming due and payable in accordance with the terms hereof, shall be
nonrefundable for any reason whatsoever and shall be in addition to any other
fees, costs and expenses payable pursuant to the Commitment Letter, the
Refinancing Engagement Letter, the Loan Documents or any other definitive
documentation existing or to be entered into among the Borrower and its
Subsidiaries and Affiliates and ABN AMRO and its Affiliates.
(b) The
Borrower’s obligation to pay the fees or expense reimbursements described or
referred to herein will not be subject to counterclaim or setoff for, or be
otherwise affected by, any claim or dispute the Borrower or its Affiliates
may
have.
(c) The
provisions of Section 9.18 of the Loan Agreement relating to obligations to
make
payments in US Dollars thereunder is hereby incorporated by reference herein,
except that references to “Obligors” used therein shall be deemed to mean the
Borrower for purposes of incorporation of such section herein.
(d) Nothing
in this Agreement shall be construed to limit any of the rights of ABN AMRO
or
its Affiliates under the Commitment Letter.
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If
the
foregoing is in accordance with your understanding, please sign and return
a
counterpart of this Agreement whereupon it will become an enforceable agreement
among us.
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Very
truly yours,
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ABN
AMRO BANK N.V., HONG KONG BRANCH
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By:
___________________________________
Name:
Title:
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By:
___________________________________
Name:
Title:
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THE
PROVISIONS OF THIS AGREEMENT ARE ACCEPTED AND AGREED TO AS OF THE
DATE
FIRST ABOVE WRITTEN:
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By:
___________________________________
Name:
Title:
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